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Bubble? What Bubble?

Marc Andreessen, one of Silicon Valley’s biggest venture capitalists, has no fear.

Contrary to all the recent hype about a bubble, you’ve said that tech companies are actually undervalued. So in true 1999 fashion, should I take my life savings out of mutual funds and toss it into tech stocks?

I’m certainly not an investment adviser, but on a 30-year basis, these things are cheap. If you compare how big industrial companies like G.E. are valued compared with big tech companies like Microsoft, Cisco, Google and Apple, tech stocks have never been valued more poorly in comparison. So not only is there no bubble — these prices are reflective of the fact that the market still hates tech. This bubble talk is about everybody being unbelievably psychologically scarred from 10 years ago.

The nearly $3 billion I.P.O. of Netscape, a company you helped found, has been cited as the beginning of the 1990s tech bubble. Do you recall a moment back then that felt like the last days of the Roman Empire?

There was a point in the late ’90s where all the graduating M.B.A.’s wanted to start companies in Silicon Valley, and for the most part they were not actually qualified to do it. They brought the whole sideshow of the hype and parties and all that crap. M.B.A. graduating classes are actually a reliable contrary indicator: if they all want to go into investment banking, there’s going to be a financial crisis. If they want to go into tech, that means a bubble is forming.

It’s heating up again, but it’s still not anything near like it was in ’99. And even though people love to badmouth ’99 and 2000, you also have to remember that’s when Google got built.

Photo

Credit
Robyn Twomey for The New York Times

After hearing a story about Foursquare’s co-founder, Dennis Crowley, walking into a press event in athletic wear and eating a banana, I developed a theory that bubbles might be predicted by fashion: when tech founders can’t be bothered to appear businesslike, the power has shifted too much in their favor.

Believe it or not, this goes deep into the interior mentality of the engineer, which is very truth-oriented. When you’re dealing with machines or anything that you build, it either works or it doesn’t, no matter how good of a salesman you are. So engineers not only don’t care about the surface appearance, but they view attempts to kind of be fake on the surface as fundamentally dishonest.

That reminds me of Mark Zuckerberg’s criticism of ‘‘The Social Network.’’ He said that ‘‘filmmakers can’t get their head around the idea that someone might build something because they like building things.’’

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Aaron Sorkin was completely unable to understand the actual psychology of Mark or of Facebook. He can’t conceive of a world where social status or getting laid or, for that matter, doing drugs, is not the most important thing.

People view you as an oracle in the valley. I was hoping you’d blow my mind with something you see in the future. Gordon Bell at Microsoft is working on wearable computing, where it literally records everything around you all the time — video, your conversations. He wants to get to where it’s like a pendant around your neck. We also have a company called Jawbone that makes peripherals for smart phones and tablets. Today, they sell Bluetooth headsets and speakers, but soon they will sell all kinds of wearable computing devices.

Will we soon be dealing with antigaming laws so that drivers can’t play wearable video games while driving down the highway?

That assumes they’re driving. Google is working on self-driving cars, and they seem to work. People are so bad at driving cars that computers don’t have to be that good to be much better. Any time you stand in line at the D.M.V. and look around, you’re like, Oh, my God, I wish all these people were replaced by computer drivers. Ten to 20 years out, driving your car will be viewed as equivalently immoral as smoking cigarettes around other people is today.

INTERVIEW HAS BEEN CONDENSED AND EDITED.

A version of this article appears in print on July 10, 2011, on Page MM13 of the Sunday Magazine with the headline: Bubble? What Bubble?. Today's Paper|Subscribe